Brand Equity: In Conversation With Marketing Legend Philip Kotler

thank you so much for joining us Philip Kotler this is truly an honor it's mutual I'm going to start with you know the book you wrote in 1967 which is really a book that is you know celebrated by everybody who's learned marketing marketing management are the book that you wrote then how much of it do you think is still holds true today and how much of it is redundant yes I believe that the book has in it of the basics that create a marketing capacity and capability and I wouldn't get rid of any of that part because it's all about how do you satisfy and win and grow customers and that hasn't changed however each Edition and it comes out every three years brings in the latest thinking so the if I have two people one who has the 1967 copy of the book and is doing marketing and depending on the 67 copy and the other ones using my 14th edition right I know I will bet on the 14th edition for example when a topic like branding starts up in 1967 I only gave two pages to kraanging now it is in every chapter same thing with social media maybe five years ago the book had mention of social media now every chapter has examples of digital and social media mr. Cutler you've also seen you know the marketing evolution which has come a long way in its entire journey and today is a day where almost everybody is talking about the rise of digital and and you know marketers are more and more focusing on the digital piece than really the brand piece because of the fact there is just so much pressure do you think it's too much is made out of this medium or is it being given its - you know I I think that it is being underdone rather than overdone although it seems to be overdone in some Minds because many companies are still hesitant to shift into more use of digital and social it's just amazing how there's an inertia in companies to just do what they've been doing for example does it make sense to spend as much on 30-second commercials that cost you so much money in the face of evidence that people don't even want to watch commercials anymore they go to the bathroom when they take a place they want to be more on the computer and doing the internet and and doing active things so why do we continue spending so much that way when we should shift some of our budget to Facebook and good.your and Google and so on so I think that we're still under doing the digital so give me a sense in terms of prediction going forward in terms of the whole dispensed mix yes how much would be traditional how much it'd be digital would it be 50/50 yeah no let's say first we're what has been happening and where it's going one of these signs of a smart company is not to throw a lot of money at digital without knowing how to use it so take 10% of your budget put it into digital but put in the hands of a team of very capable net netizens an Edison is someone who grew up with the net a young millennial person or earlier give them the money and say play around with it and we're going to give you more if it shows that it's working maybe another 5% but if it's not working we're going to wait to watch how it works for other companies we're going to learn from others as well as ourselves now how far will it go well at Procter & Gamble they're telling me that depending on the product they are now at a range of 25% to 35% being spent on digital okay by the way I think they're still growing their total advertising budget because they don't want to let go of the branding built by the 30-second commercial I think it will go to 5050 if I ask you to look at the marketing function and how it's evolved over the years within an organization right and the kind of prominence it used to have where it has currently asked the case may be do you think the marketing function actually has progressed with an unorganized Asian or actually regressed well no it is progressing and let me tell you what the evolution has been we used to have only a sales force in the company there was no reading need for marketing and no one knew what it meant except sales forces realized they needed some extra people in the sales force one group to sort of do some brochures and ads because why ask the salesman to do that they're not capable some to find hot leads and someone who would just do marketing research they help the salesman after a while those three should maybe make another department so initially it's called the marketing department over time the group was known mostly for communications not not deciding what products the company should make simple and not even involved in being asked why are we making that product the marketing people were best known for 30-second commercials so even there was even a CEOs who were engineers and they took over a company or created a company he said I don't like marketing I don't know why I need it but I know I need some promotion so that became the one P that got noticed until some CEO started to say I need four PS I want a marketing plan product price place promotion okay then some said at a higher level before you do product price price place and promotion who are whose our customer that led to segmentation targeting and positioning what are the customer segments which one should we target and what do we say about ourselves and then it's still left marketing as a group that was more a cost center that would do research about the consumer would try to find some insights into the consumer but it wasn't affecting the company's strategy in fact the name of the head of marketing was vice-president of marketing who was running a nice organization with some services that it was selling to it within the company now we have a different title we call the person the chief marketing officer and that's very much progressive because it says we need a cheap of a marketing also should be a chief it's not enough to have a financial chief officer and and the technology chief officer so finally in the United States is now about 3,000 CMOS and they sit with the other executives to influence decisions in the interest of satisfying customers so there's been a lot of juice when you meet chief marketing officers or even CEOs who talk about their brand ideology right all of them talk about a particular cause but they're very purpose-driven in their marketing and that's really the new lingo whether it's P&G whether it's HUL you name it they all have some kind of leaning towards some purpose and that's called purpose driven marketing so every time you interview one of these CMOS you it almost sounds like you're talking to an NGO ok you know so you you're kind of confused as to you know okay's for instance 8ul talks about sustainability every aspect of marketing or that product is related to sustainability and they almost sound like an NGO and I've said that too you know Keith wheat several times half-half CMOS in this you know great you know attempt to try and look good do good to build brand goodwill forgotten that there actually need to sell their products no they haven't forgotten it that's how they're gonna sell more of it you really think yeah here's the thing I keep telling companies you're making soap but what's your higher purpose well to help people be cleaner and not catch germs and all kinds of always think of whatever you're doing you know you're not just laying bricks to build a place you're building a cathedral you're honoring God or something you know put it at a level that is inspirational and what is that about you know you got employees all the time doing routine work we want them to feel inspired by what they're doing it looks a person who's a farmer might say well I'm just making corn no no you're feeding the world so some of this idea there's not just about sustainability it's every company should try to look for an elevated view of how they are making a difference in the world first of all most of their most of their effort is is to show they're either better than a competitor or better and different than a competitor or making a difference in the world I like that third that's marketing 3.0 right so you're so basically you're saying that that consumers are really interested in knowing what is the what is in the company ethos and will then buy the product if they're educated consumers it turns out that maybe someone who is poor and just wants the lowest price for something it won't he or she wouldn't even know if the company is responsible that for social things but as more and more people get educated and let's take a country as an example let's take everyone in Sweden is educated you know Sweden Swedish people would not buy from a company that isn't practicing sustainability there's no choice in Sweden you better practice it in the United States maybe it's like that but not all the way and maybe in India maybe five to ten fifteen percent will care about it maybe it's premature to to go spear show and to go higher purpose for most of your market it depends there are some products that are selling in highly educated markets and there it will work several uh you know CEOs of holding companies advertising marketing conglomerates that you meet the Martin Sorrell to the Maurice ladies of the world or it actually be chief marketing officers one of the key houses that they put on the table is the fact that there is just too much interference from procurement right from the procurement division of the company yeah and this has really come to light after the grand the recession that we've all just seen if we just kind of coming out of but because of that because of the kind of pressure that marketing has on it to either slash budget so just become less of a cost center they find that their powers have somewhat been diminished the but whose powers have been diminished the problem that is facing marketers is that the CEO along with the chief financial officer want to a measure of roma roma is return on marketing investment I wrote Romeo Roma depends on whether its return on marketing assets or an investment and those numbers don't exist yet and what if you're getting a zero return maybe if we tell shouldn't spend money on marketing maybe if marketing is largely promotional money use the money to make a better product don't use it to just sell the existing products so there will be all kinds of shifts going on and in how much money marketing should get this is why I urge the CMO to become a friend of the CFO because the CFO is your enemy in marketing because he or she keeps telling the CEO we're spending too much money on marketing now if the to go down have lunch together and work out a metric system that will satisfy the CFO he may become your best ally so I'm sure the I'm sure in your marketers are paying heed to what you're saying but you know I want to talk about the CMO today yes and the fact is most CMOS today are not netizens it's correct are not digital citizens and the fact that they have to suddenly you know take on so much is a little bit intimidating they're doing it but they really do they're not very comfortable with it meaning they admit that they they aren't adequately trained in digital given that do you think given the complex landscape we live in do you think CMOS should be as old as they are while running these companies I've been predicting that marketing will be run by younger and younger people in the future I can imagine the CMO of a company being 20 years old yeah yeah how fast you see that happen I don't I have no measures of what's really happening to the average age of the people running marketing I think the average age of the people in marketing will go down and whether the top person is going to remember experience is very important to experience could is something that the younger people don't have you don't want to throw it away unless it's blocking what the younger people should be doing so I would say that the average that marketing departments who as let me bring in as an answer to question what we mean by big data big data is so important now we are at a point which we never thought we would be at where we can we know a lot about any individual customer the media they use the products they buy when they buy these products and so on and that's all in big data now big data is going to be the repository of of our insights there if we can look at trends in big data if we can look at segments in big data we will have clues to how to change our price our product and so on and so forth so marketing will become much more scientific we're moving from art to science by the way I don't want to use loose creativity the two most important things in marketing is to have left brain people and right brain people right brain is used for creative people left brain for analytical people both are important but what's getting very popular now is hiring people who are good at marketing analytics so they can look at big data and draw insights about the curse so basically what you're saying is that marketing will become a lot more geeky yes right and and that's bad for people who just started into marketing because they had a course in advertising and said I want to learn how to do some ads it's it gets a different flavor so you talked about the 30-second commercial but you know tied to the Internet where the inventory is unlimited you know we've seen a brand's you know do storytelling which is as long as like four minutes four and a half minutes right because there is no end and the thing is storytelling these days is such a big concept that sometimes it's such a beautiful story and sure I'm entertained yeah but I don't know what you're selling right and that seems to be a problem of software you can you strike a balance between selling and also telling a beautiful story yeah all right do you think marketers today are getting a bit too carried away with you know well they shouldn't forget that the story should reinforce the interest in buying the product and sharing something about being touched by the company for that story it should always be a touching story heartfelt appealing to emotions marketing 1.0 yes tide does clean better tie in marketing 2.0 is the love of a mother for child and giving her the best and so on so I'm mocking a final huh 3.0 would be showing that the mother is doing more for the child than just holding the child having a vision of how that girl or boy will grow up and planning to help them realize their aspirations whatever it is your point is well-taken that the story should really be adding an interest in touching and being part of the company in some way and that may be missed by now there is a new thing happening called called content management yeah and now that is really developing material that is not selling material exactly facilitating the ability to do content connection with your customers see most of your customers aren't going to connect with you until the next purchase cycle but I'll tell you one thing that Nike has done Nike was worried that no one buy a toy thinks about Nike until their shoe wears out and they need a new pair Nike wants you to be close to Nike all the time so what they did is they put a chip in your shoe and now you are getting measures on how fast you run and how far you run and if you can send that to information to friends who are running to Nikes on my mind every day so companies have this problem if people don't buy our product every two years they forget about it can I connect with them more continuously and content is one of those ways I want to talk to you about you know what marketing 4.0 will look like going forward if we are currently in the marketing 3.0 phase yeah now remember 1.0 so it means that you're doing the kind of job proving that your product is superior to other competitors but doing it rationally no emotion or window-dressing 2.0 is to do it in a way that realizes that people like to humanize whatever's involved in your tapping on emotions 3.0 you go further than you say there's reasons to be compassionate to there are some people can't even afford the product there's the planet is being hurt by some practices and let's care about that that's 3.0 people have asked me aren't you going to write a book on 4.0 I said well maybe if I ever think of what it might be and I don't and I and the answers I don't know how you go beyond the one two and three because the three is the how beyond compassion what is there and then I realized what it is it's mass Abraham Maslow's need hierarchy famous psychologist who had a hierarchy of needs starting with if we can't meet our basic needs if we're starving we don't worry about any other needs we just got to eat the need to belong belong that satisfied me that it's either second or third and as you go up Maslow's top need was not thought about that much it was self-actualization self-actualization means you have a dream about yourself and your capacity and what you would like to be and become self aspirations involved in that and many companies at 4.0 would think maybe how can I help people realize their aspirations better it's too new to formulate but it's going to happen so but you can say that a chief marketing officer in an organization is best poised to become the CEO well I'm trying to say that yes yeah that they that now if some other condition exists and I say what the other condition is it all comes up it's very much to my like my telling all of my students if you really want to rise to the top don't only do marketing to a major in marketing and finance because as you get higher up in an organization more talk is about how much money are you making and about all the financial analysis and so on so if that CMO who gave his company or her she gave the company great ideas and and has more ideas ideas like Richard Branson has ideas and all the time should be the CMO but a CMO should also know finance so to the extent that that person has that side to it will be a very strong president or see CMO CEO I mean you know one of the last questions I want to put to you is agencies are going through a really rough time right now yes the kind of infidelity they're seeing with you know their their partners but brands really being quite promiscuous these days how do you see the agency structure going forward the old you know one creative agency one media agency and that whole marriage of sorts is that you know extremely bossy well any agency that wants to survive and that is large probably should offer the customer the company whatever it wants and what the customer wants is a mix of help on digital and traditional and here's the problem that I worry about that the money is more made on traditional I mean well isn't that the easiest life to just create a commercial and then get rent from it and so they may tell their client you know you really need 80 percentage converter you know traditional in their hearts they know that they don't need that much traditional so you got to work with your agency to get at the truth about what will optimize their the impact and it may be a mix that isn't a very profitable mix for the agency mr. Cutler three key messages to the Indian marketers who are watching this interview one marketing is a force for good and used in the right way and it will be changing all the time so don't depend on a textbook written in 1967 but take the 14th edition which will bring you up to date and also work well with all the other functions in a company please especially become a friend with the vice president of finance and get to know the CEO and who needs more education as well and what marketing is so he is not simply a 1p CEO thank you so much miss a call that is truly benevolent I pleasure to thank you you

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Keywords: philip kotler, marketing legend, aib, marketing expert, ad legend, basics of advertising, advertising tricks, social media marketing, raghuram rajan speech, market makers, advertising legend, et now, sonali krishna, advertising in india, ad guru, brand equity, digital medium, marketing tips, digital advertising, sundar pichai

Id: Knm-kuI_Pmk

Length: 24min 8sec (1448 seconds)

Published: Thu Nov 27 2014